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Growth in Transition Countries: Big Bang versus Gradualism

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  • DELL'ANNO, Roberto

    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • VILLA, Stefania

    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

Abstract

This paper analyses the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate big-bang versus gradualist approach. It builds a new indicator for the speed of transition reforms based on a three-way principal component analysis. It shows that: (i) the speed of transition reforms Granger-causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization program, also drive economic growth. While the first two results are robust to different estimators, the impact of control variables depends on the econometric specification.

Suggested Citation

  • DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    • Handle: RePEc:sal:celpdp:0122
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    2. Kant, Chander, 2018. "Privatization and growth: natural experiment of European economies in transition," MPRA Paper 96080, University Library of Munich, Germany, revised 28 Sep 2019.

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    More about this item

    Keywords

    speed of transition; economic growth; three-way principal components analysis;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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